Edinburgh Investment Trust PLC Results analysis from Kepler Trust Intelligence
31 Maio 2023 - 7:43AM
RNS Non-Regulatory
TIDMEDIN
Edinburgh Investment Trust PLC
31 May 2023
Edinburgh Investment Trust (EDIN)
31/05/2023
Results analysis from Kepler Trust Intelligence
Edinburgh Investment Trust (EDIN) has delivered strong
outperformance of the benchmark in the year to 31/03/2023, with a
NAV total return of 7.9% comparing to a 2.9% total return for the
FTSE All Share Index. EDIN's share price return was 8.4%.
EDIN has outperformed the FTSE handsomely since James de Uphaugh
was appointed manager in March 2020, with a NAV total return of
65.9% and share price total return of 75.5%, both well above the
47.4% total return of the benchmark.
During the year the board refinanced EDIN's long-term debt at
much more attractive terms, the new borrowings being taken out at
2.44% p.a. compared to the rate of 7.75% on the previous debt.
Kepler View
These are good results which contribute to a strong track record
since the change of management in March 2020. Pleasingly, the
drivers of return have been diverse at the stock level in the
period under review, with BAE Systems, Natwest and Centrica amongst
the biggest contributors, along with Greggs, Standard Chartered and
Weir. James has positioned the portfolio to have exposure to
multiple themes. While holdings in banks and energy-related names,
sectors benefitting from high inflation or high rates, have helped
returns in the recent past, the portfolio is also exposed to an
improving picture for the UK consumer, with James arguing a peak in
inflation and interest rates is likely to relieve the pressure on
households over the coming year. Meanwhile, the UK remains cheap
versus international peers, after being out of favour for a number
of years. This could provide further impetus behind Edinburgh
Investment Trust's (EDIN) returns, with the potential for an
improving economic backdrop to see that valuation differential
close.
One major supportive factor for the trust going forward is the
improved gearing position. The trust had suffered in the past
thanks to having very expensive long-term debt. The board arranged
cheaper debt to replace it in late 2021, locking in a highly
advantageous rate before the cost of debt rose once more over 2022.
This means James has plenty of cheap cash to put to work in the
market, which should be supportive of returns over the course of a
cycle as markets rise. NAV returns of the trust have benefitted
over 2022 as rising interest rates cut the fair value of this newly
rearranged debt, adding 4 percentage points to NAV total
returns.
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May 31, 2023 06:43 ET (10:43 GMT)
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